[Kmymoney] early loan repayment

Fri Feb 17 16:50:23 UTC 2012

On Thursday, February 16, 2012 09:02:40 hugo borrell wrote:
> 2012/2/16 Thomas Baumgart <thb at net-bembel.de>
> 
> > Hi,
> > 
> > on Thursday 16 February 2012 06:47:41 hugo borrell wrote:
> > > Hello,
> > > 
> > > I am trying hard to use the "loan" accounts of KMM to reproduce what
> > > happened to me, and I can't figure out how to do it : loan has started 2
> > > years ago, rates have varied annually and I have made an early refund
> > 
> > that
> > 
> > > changed my monthly fee.
> > > 
> > > 
> > > 1) when creating the initial loan, all that is recorded in the registry
> > 
> > is
> > 
> > > a serie of operations that have all todays'date. I would expect the
> > 
> > monthly
> > 
> > > loans of the 2 previous years !
> > 
> > Are they shown in black or gray (dimmed)? I expect the later and they are
> > a
> > preview of a scheduled transaction. So no transaction has been entered
> > into
> > the ledger yet. This is backed up by the current balance of 0 (see step
> > 2).
> 
> You are true, this is gray. BTW I am surprised to see 25 schedulled
> transactions for today : I suppose they are the 25 past transaction which
> are schedulled for today, but I don't really get why TODAY instead of the
> past 25 monthes. I would expect 25 black past transactions and many gray
> future transactions... Is that Because of step 2 ?
> 

It says "today" because the transactions have not yet been entered. When you 
create the loan account, there is an option to create it against an existing 
loan which has previous payments already made. Alternatively, you could go 
enter each of the overdue scheduled transactions and match them against the 
ledger, but that is a huge hassle.

> > > 2) On the main page, the account is created as "passive" but whith
> > > amount
> > > 0. I would expect the actual value, i.e. initial value minus what has
> > 
> > been
> > 
> > > refunded up to now...
> > 
> > "Passive" I assume means under the group of Liability accounts (in
> > contrast to
> > possibly "Active" as in Assets). To start with, the money out of the loan
> > must
> > have gone somewhere. E.g. in case you buy a house and need a loan, you
> > would
> > have two accounts, one for the house (asset) and one for the loan
> > (liability).
> > Now if you buy the house, you enter a transfer from the loan account to
> > the
> > house. It's not an expense, since you still own the house. Now if you pay
> > your
> > monthly dues to the loan, the balance on it shrinks over time.
> 
> I saw this option of transfering the money to some other account value
> (that's a house, precisely), but choosed not to use it since money in the
> house I live in is not money I can use (unless to buy another house) and is
> money that I'm unsure about the value : I know how much I bought my house,
> I have no idea of today selling price, not to mention the price it will be
> sold when I die... Or choose to move.
> BTW the loan could have been taken for some holidays or goods that cannot
> be sold again...
> 

The way that double-entry accounting works is that the creation of the 
liability necessarily provides some income. In the case of a house, it would 
go to an asset account for the house. The value is the "book value", or the 
amount you paid for the house. If you wanted to track the current value, that 
is called "market value" and the updates are called "mark to market". 
Generally assets will be tracked as book value, for a variety of reasons, 
including depreciation calculation in many tax jurisdictions.

If the loan were taken to go on holiday, the income would be cash into 
whatever account you told the bank to deposit it into, so that you could pay 
for the vacation. If you financed the vacation directly through the travel 
agency, the transaction is a little more involved:

Create $100 loan to travel agency
Receive $100 into cash
Withdraw $100 from cash
Spend $100 on vacation expenses

Someone better at accounting than I may have a better suggestion, but that is 
how I understood it.

> So how can I let the loan be some sort of an expense, like a "passive"
> account with a negative value of the money I would have to pay back to get
> rid of it ? This would let me know how balanced I am between "active"
> (savings) and "passive" (loans)...
> 
> > > 3) How can I add an anticipated refund at some point ?
> > 
> > I expect you are talking about an extra payment towards the loan account
> > to
> > reduce the balance even more: Simply add a transfer transaction from e.g.
> > your
> > checking account (or whereever the money came from) to the loan account
> > and
> > you're set.
> 
> Will KMM automaticaly calculate the interests again to ajust to the new
> situation ?
> 

It will...  I make additional principal payments against my mortgage to pay it 
off sooner. The interest is correctly calculated each month by KMM.

-- 
Thanks,
Fernando Vilas
fvilas at iname.com
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